GCA call to action as Royal Mail raised cost to £1.65 after Ofcom recommendations
The greeting card industry has erupted with fury at Royal Mail’s announcement of a 22% increase in the price of a first-class stamp to £1.65 just a day after Ofcom recommended cutting Saturdays out of the second-class delivery schedule.
As Royal Mail moves its focus to the more profitable parcel side of the business, the inflation-busting rise – predicted by the GCA at the recent roundtable event held with retailers and publishers on The Henries judging day – has been met with condemnation from across the card industry as well as the public, and the Citizens Advice charity.
Despite the current annual inflation rate being just 2.9%, the lowest since March 2021, Royal Mail has blamed the enormous increase on the “significant” cost of running the universal service obligation of its six-day same price goes anywhere in the UK deliveries.
However, it is currently keeping second class post at the 85p figure which it rose to on April 2 when first class prices also rose by 10p to £1.35 – already almost double the 2019 price of just 70p, prior to this latest increase.
“Despite attempts by Royal Mail’s PR team to frame this as necessary to ‘protect the one-price-goes-anywhere service’, the numbers tell a different story,” GCA council Royal Mail lead and Cardology co-owner David Falkner said, expressing the association’s “deep concern” over the significant risks to both the industry and consumers.
He added: “As recently as May, Royal Mail announced that its letter revenues had increased by 4.4% last year, driven largely by prior price hikes. Stamped letter revenue, in particular, saw a marked increase 0f 14.2%, raising doubts about the need for another steep price rise.”
And the association, the trade body for the UK’s world-renowned £1.5billion greeting card industry, made a strong call for action for retailers, publishers, and suppliers to lobby their MPs, support the #Cardmitment campaign highlighting sending cards by the still-affordable 85p second class option, and show how powerful small businesses can be, representing their customers.
Citizens Advice director of policy Tom MacInnes said: “This price increase couldn’t be coming at a worse time for consumers, who will now be paying more than double the price of a first-class stamp compared to five years ago.
“Royal Mail is choosing to hike prices far beyond the rate of inflation at a time when millions continue to miss important letters, as a result of post delays. People shouldn’t be having to fork out more while experiencing such poor service.
“Ofcom should be holding Royal Mail to account, but it’s letting the company get away with setting rocketing prices in the wake of half a decade of missed delivery targets. We need the regulator to make sure reforms of our postal service put the needs of consumers first – not Royal Mail’s bottom line.”
The charitable organisation’s data shows 7.2million people experienced a delay in sending or receiving letters this spring with 1.4 million people facing serious consequences including missing health appointments, legal documents, fines and benefit decisions.
Making the price increase announcement late on Thursday, 6 September, Royal Mail said the way people communicate has changed so letter volumes have fallen from 20billion in 2004/5, an average of 14 per week per household, to around 6.7bn a year in 2023/4, just four letters per week for the average household while the number of addresses to which RM Royal Mail must deliver has risen by four million in the same period.
The delivery service says prices are still below European averages of £1.73 and £1.33 respectively, having calculated prices across 29 countries in July.
Nick Landon, chief commercial officer at Royal Mail, said: “We always consider price increases very carefully. However, when letter volumes have declined by two-thirds since their peak, the cost of delivering each letter inevitably increases.
“A complex and extensive network is needed to get every letter and parcel across the country for a single price – travelling on trucks, planes, ferries and, in some cases, drones before it reaches its final destination on foot. We are proud to deliver the universal service, but the financial cost is significant.
“The universal service must adapt to reflect changing customer preferences and increasing costs so that we can protect the one-price-goes-anywhere service, now and in the future.”
However, David added: “It’s no surprise that social media is once again flooded with frustrated consumers who are both angry and disappointed. The public’s dissatisfaction with Ofcom’s decision and the poor service from Royal Mail is palpable, and it reflects a growing sense of disillusionment with how these vital services are being managed.”
An impassioned Heidi Early, co-owner of Earlybird in Stoke Newington and one of the retailers at the GCA roundtable last month discussing how to boost Christmas card sending, demanded to know why Royal Mail doesn’t increase parcel prices as “30p on a parcel would make a significant difference to revenue”.
Heidi added: “Royal Mail is being allowed to kill off a vital public service, its management and Ofcom should hang their heads in shame – the ripple effects of their decisions and inaction could be catastrophic.
“I have customers saying they would send more cards but the post is now too bloody expensive and they don’t even know if the card will arrive as service is so patchy.
“The price of a first-class stamp has increased by 117% in four years and yet service levels have fallen, and Royal Mail’s rhetoric is that the USO is killing it as a business. I’d suggest it looks at its management before blaming the poor lowly postal service!”
“RM keeps saying it has to increase it this much because it has a massive hole in its finances and the public doesn’t send letters anymore, how we communicate has changed it keeps saying – actually, I think they’ve just gone deaf!
“Of course how we communicate, especially on a business level, has changed. But sending cards hasn’t changed. The greeting card industry is a growing, thriving £1.5billion industry, people still send and post cards. In fact, they’re even more important in our digital age. And when times are tight people might cut back on presents but they still send cards.”
Ofcom announced on Wednesday, 5 September, that following its The Future Of The Postal Service review launched early this year it was proposing cutting second-class deliveries on Saturdays, and possibly to only alternate days, with an uncapped and unregulated price for sending letters first class.
with the plans to be put to consultation before a final decision is made next summer, despite launching a probe into RM’s ongoing failure to meet its quality-of-service obligations.
David added: “Ofcom’s announcement aligned with our expectations but still delivered a disappointing outcome. While we anticipated a delay, we were surprised to learn that Ofcom will not meaningfully consider improvements to QOS until summer 2025.
“We question how such a critical service provider can be regulated in this manner, particularly when no other British monopoly would be allowed such leeway in delivering a fundamental service.”
The GCA is urging industry stakeholders and consumers to unite in response to these developments by adhering to the strategy outlined at the August roundtable:
- Support the #Cardmitment campaign: This highlights the affordability of second-class stamps, currently priced at just 85p. This campaign is essential to ensuring the survival of greeting card sending, a cherished tradition in the UK.
- Lobby your MP: With first-class stamp prices spiralling uncontrollably and beyond the scope of current regulation, it is crucial to demand that second-class prices be protected. Additionally, push for the restoration of service quality. Without intervention, the UK is one step closer to losing a beloved national postal service that is both affordable and reliable.
- Remember how powerful you are as small businesses: For many of your customers, you’ll be the only voice protecting their interests at a grass-roots level. This is particularly important with there being so many first-time MPs who won’t yet know how full their postbags may bulge, once the future of the Royal Mail is again under active discussion.
“The GCA stands firm in its commitment to advocating for both the industry and the consumers we serve. We believe that only through collective action can we ensure that the postal services remain an accessible and dependable resource for all,” David said.
David Gold, Royal Mail’s director of external affairs and policy, will be speaking at the GCA AGM & Conference on Thursday, 19 September, taking place at Bristol Harbour Hotel. To put forward questions to him, email GCA CEO Amanda Ferguson at amanda@gca.cards. You can book tickets now.
